Monday, June 27, 2011

Despite the fact that Wikileaks founder Julian Assange has not broken any laws, the US government remains determined to get him behind bars, seemingly by any means possible. Attempts to torture Bradley Manning into giving evidence against the Wikileaks founder appear to have failed, but now a US Grand Jury has been set up to gather alternative forms of "evidence". Meanwhile, Washington is actively encouraging Sweden to extradite Assange from Britain, then hand him over. So what exactly is the US government trying to achieve with this global witch-hunt? When and how will it end?

Let's examine four possible reasons why the US government wants to get hold of Julian Assange, and gauge their potential for success.1. Make An Example Of Him.

This of course is part of the reason why Bradley Manning was tortured. Wikileaks revelations have severely embarrassed the US government, and they are determined to intimidate anyone even thinking of following Manning's or Assange's example.

It won't work, of course. Treating innocent people like hardened criminals only generates increased public resentment of authorities. Just imagine the global outcry if Assange were sent to Gitmo. Then imagine how donations would pour into Wikileaks, and how many more Wikileaks-style sites would spring up in support.2. Disrupt His Work With Wikileaks.

Even though the US government has not succeeded in having Assange extradited to Sweden, let alone the USA, their efforts have clearly succeeded in hampering his work. Forced to wear an ankle bracelet and visit the local police station twice a day, Assange is effectively under house arrest. His communications and movements are being monitored, and he is forced to spend time with lawyers instead of fellow activists. On top of this, the US government has encouraged groups like Visa, Mastercard and Amazon.com to block donations to Wikileaks, thereby creating a funding problem.

Although Wikileaks is still able to operate and release new leaks, the disruption agenda has been reasonably successful to date. Even the sabotaged submissions "Drop Box" has remained closed. Don't expect US harassment of Assange to end any time soon.

3. Make Julian Assange the New Face Of Evil.

For members of the US military-industrial complex, the Global War On Terror was a conveniently timed replacement for the Cold War. But failed wars in Iraq and Afghanistan, Osama Bin Laden's demise, and the positive vibe of the Arab Spring have been taking the media spotlight from evil terrorists. Meanwhile, the US economy is becoming a basket case and the US public is growing tired of new military adventure. Are those who profit from endless war now searching for a new, exciting battlefield?

Cyber-space is already ablaze with increasingly damaging attacks from nation states and hacker groups, and government funding is being ratcheted up accordingly. By characterizing Assange as one of the bad guys, the US administration can make a clear "with us or against us" delineation, paving the way for increasingly draconian laws to regulate Internet use. Who's going to protect YOUR online information, terrified citizen, and how much are you going to pay them for it?

Again, this is a cynical, short-sighted approach. Compared with anonymous, invisible hackers, Assange presents a convenient face for the marketing of a new Global War On Information. But Assange has done nothing illegal, and nothing worse than any decent media organisation should do. Besides, if they imprison Assange now, others will take his place. If they shut down the Internet, activists will build a new and better one. But meanwhile, of course, there are profits to be made... for someone.

4. Fear.

The last motive for US government pursuit of Julian Assange is obvious, but widely over-looked. Top officials have been embarrassed by CableGate and the Collateral Damage video, but what else does Wikileaks have in store for them? Who else might be prepared to leak their secrets?

The world has changed but few people in power seem to understand the implications. They still think they can keep all their skeletons in the closet. Do they really think they can wind pack the technological clock? If they really want to keep their secrets safe, their best hope is to resign, cross their fingers, and go "spend more time with their families".

Conclusion:

The US government is not going to suddenly stop harassing and intimidating Julian Assange, Wikileaks, and supporters of all kinds. Only concerted public pressure, combined with proper judicial decision-making in the UK and Sweden, will be able to turn the tide of public opinion and force the US government to back off.

Meanwhile, it's important that Assange not be deported or jailed, as this will seriously threaten Wikileaks' short-term ability to operate. Public support is essential!

Assange will appear at the High Court in London for an extradition appeal hearing on July 12-13th. It's important that people everywhere make their voices of support heard NOW!

Get active right now. You can support Wikileaks on Twitter, Facebook, and other social media. You can safely donate to Wikileaks or you can contact your friends, local media and politicians requesting their support.

Sunday, June 12, 2011

Wikileaks has ushered in a new form of peaceful revolution, where the truth can no longer be suppressed and denied at will. Ignore the hysterical outrage from compromised media jocks and government officials in damage control mode. As evidenced by the recent explosion of hacker attacks by groups like Anonymous and LulzSec - matched only by their US, European and Chinese government counterparts - the game has already changed. For better or worse, the global revolution of free information is here to stay.

As Julian Assange correctly predicted years ago, there are now only two ways to secure information: either bolt the cyber-gates, erect huge firewalls, and keep a nervous finger on your Internet Kill Switch, or get serious about transparency, drag all those skeletons out of your closet, and start playing by the rules.

The problem with the first solution is that isolation and over-the-top security will make you hopelessly uncompetitive. The problem with the second solution is that your enemies might not play by the rules too - you could be hacked mercilessly, driven bankrupt, and never even know who did it to you. Enter the need for some sort of consensus, regulation and oversight, right?

Well, perhaps not. Governments around the world are now scrambling to impose their own definitive "solutions" on the Internet, but nobody is buying their ill-informed, self-interesteddrivel. Corporations and governments are the ones who need to adapt if they want to survive, but unfortunately, Western governments today are in the hands of the banks and big corporations (in China it's the other way round, but the result is much the same). Class warfare has been declared against "we, the people" and the Internet has become a battleground on which this war is being played out.

There are four distinct parties involved in this war. On the one hand we have groups like Wikileaks and ethical hackers. But the word "hacker" has negative connotations for a good reason - a lot of criminal gangs are also out there in cyber-space, probing for network security weaknesses. The governments and corporations would like you to believe these hacker groups are one and the same, of course. And so we come to the fourth party - you.

The public has an important role to play. Government Inc. would like your imprimatur on their increasingly draconian policies: are you willing to sacrifice even more money and civil liberties in the name of "security"? Or have you had enough of being scared? Ethical hackers want your support too. Are you going to watch silently while Julian Assange is extradited from the UK to Guantanamo Bay via Sweden? Are you outraged enough to speak up about revelations of corporate malfeasance, government complicity in torture, lies that lead to war, and the state-sanctioned murder of innocents?

The problem for the public is that it's all so very confusing. Mrs Carruthers down the street said that hackers should get the electric chair for their crimes, because her husband's laptop got infected with a nasty porn virus. A man on the television said it's not safe to buy things on the Internet, even though he's offering 20% off new PCs this weekend. And the newspaper editor claimed Julian Assange is putting lives at risk and doesn't care how many die. I think they've got another Wikileaks story on the front page today, by the way.

Of course, corrupt politicians have always thrived on public ignorance and gullibility. But now the snake oil is a little bit harder to sell, because we've had this nasty thing called the Global Financial Crisis. And it doesn't seem to want to go away. The prices of basics like food, water, and electricity keep going up and up, the planet keeps getting hotter, and meanwhile nobody in power has been held accountable for anything. Something's not right, is it?

So how can people know who or what to believe? The good news is that Internet technology puts all the information you need right at your fingertips! Sure, there are lots of crazy websites out there peddling their own brands of nonsense, but with just a little time and perseverance, anybody with a computer and Internet access can now discover the truth for themselves. And Wikileaks is here to help.

Sadly, Wikileaks and its founder, Julian Assange, have been widely slandered, smeared, threatened, abused, condemned and falsely accused. As a result, many people do not know what to make of them. This article seeks to explain why the arrival of Wikileaks is a paradigm-shifting moment in history, mostly using Assange's own words.

*

Like many pivotal historical figures, Wikileaks founder Julian Assange has arguably been the right person in the right place at the right time. With hind-sight, his early adventures on pre-Internet Bulletin Boards and X.25 networks provided him with the technical skills that eventually built Wikileaks, while his family's painful legal dramas provided the anti-authoritarian vision for the mission.

But that does not to detract from his own considerable intellectual achievement. A kid from the sticks, lacking formal education, developed his own revolutionary "philosophy of power" and created a platform capable of rocking the world's most powerful institutions.

Despite a major confrontation with the greatest superpower the world has ever known, despite house arrest and the looming threat of deportation, Wikileaks is still pumping out stories that affect developments all round the globe. It's a testament to the power of Assange's original vision.

Last month, in a widely ignored interview with Swiss art critic Hans Ulrich Obist, the enigmatic Australian opened up about the technological developments, moral inspirations, and "intellectual tradition" behind his organisation.

As has been widely reported elsewhere, Assange graduated from cracking software encryption as a 15 year-old to hacking into government computer networks. But how did this affect the Melbourne student's thinking?

"For someone who was young and relatively removed from the rest of the world," says Assange, "to be able to enter the depths of the Pentagon’s Eighth Command at the age of seventeen was a liberating experience.

This was at a time when the embryonic Internet was still not available to people outside a few university research departments, US military contractors, and the Pentagon. Countries were slowly building and linking their own networks, but access was limited to those with credentials. Assange joined a very small community of underground hackers - "perhaps only twenty people at the elite level that could move across the globe freely and with regularity."

"It was a delightful international playground of scientists, hackers, and power," Assange explains. "For someone who wanted to learn about the world, for someone who was developing their own philosophy of power, it was a very interesting time."

Like Assange, many of these hackers lacked a formal education. But they were clearly intelligent, and developed their own code of ethics.

"I actually think most computer hackers back then were ethical," he says. "We were deep underground, so most of our connections didn’t rise above the light and we were proud of that discipline. Those who knew did not speak. Those who spoke did not know.

"The people engaged in the really serious business, because of the risks involved, were almost completely invisible until they were arrested."

In a book titled "Underground", Assange described the circumstances leading to his own arrest. The experience clearly had a strong affect on his thinking. What exactly was he trying to achieve?

At this stage in his life, Assange was closely involved with a group called the Cypherpunks, who "felt that the relationship between the individual and the state should be changed and that the abuse of power by states needed to be checked, in some manner, by individuals."

"We saw that we could change the nature of the relationship between the individual and the state using cryptography" he explains. "The use of mathematics and programming to create a check on the power of government, this was really the common value in the Cypherpunk movement."

The rebellious youths were not just "hackers" in the usual pejorative sense. They were driven by more than just a juvenile desire to run amok and keep the government off their backs.

"Rather, our will came from a quite extraordinary notion of power, which was that with some clever mathematics you can, very simply — and this seems complex in abstraction but simple in terms of what computers are capable of — enable any individual to say no to the most powerful state.

"So if you and I agree on a particular encryption code, and it is mathematically strong, then the forces of every superpower brought to bear on that code still cannot crack it. So a state can desire to do something to an individual, yet it is simply not possible for the state to do it — and in this sense, mathematics and individuals are stronger than superpowers."

The basic concept of Wikileaks was already born. It was just a matter of working out how best to implement it.

"If the desired end state is a world that is more just, then the question is: What type of actions produce a world that is more just? And what sort of information flows lead to those actions? And then, where do these information flows originate? Once you understand this, you can see it is not just starting somewhere and ending elsewhere, but rather that cause and effect is a loop."

And this is where the genius of Wikileaks comes into play. It's one thing to have the programming and mathematical skills to block government censorship and intrusion, but how do you implement this in a meaningful and lasting way, out there in the big, bad world?

"WikiLeaks is many different ideas pulled together, and certain economies permit it to be cheap enough to realize" says Assange.

"It is a complex construction, like a truck, which has wheels, cranks, and gears... there is a destination that this truck should go to and a way to get out of there... there’s a path, and therefore there needs to be a truck that will go down this path."

Assange speaks of "economic epiphanies" which illuminated this path for him.

"Imagine a field before us composed of all the information that exists in the world... Some of the information in this tremendous field, if you look at it carefully, is faintly glowing. And what it’s glowing with is the amount of work that’s being put into suppressing it.

"So, when someone wants to take information and literally stick it in a vault and surround it with guards, I say that they are doing economic work to suppress information from the world. If you search for that signal of suppression, then you can find all this information that you should mark as information that should be released.

"So, it was an epiphany to see the signal of censorship to always be an opportunity, to see that when organizations or governments of various kinds attempt to contain knowledge and suppress it, they are giving you the most important information you need to know: that there is something worth looking at."

"Censorship expresses weakness, not strength," says Assange. "Censorship is not only a helpful economic signal, it is always an opportunity, because it reveals a fear of reform."

This is an important point for Assange.

"In places where speech is free, and where censorship does not exist or is not obvious, the society is so sewn up - so depoliticized, so fiscalized in its basic power relationships — that it doesn’t matter what you say. And it doesn’t matter what information is published. It’s not going to change who owns what or who controls what.

"And the power structure of a society is by definition its control structure. So in the United States, because of the extraordinary fiscalization of relationships in that country, it matters little who wins office. You’re not going to suddenly empty a powerful individual’s bank account. Their money will stay there. Their stockholdings are going to stay there, bar a revolution strong enough to void contracts.

Assange says China is "still a political society" whereas "the basic power relationships of the United States and other Western countries are described by formal fiscal relationships." His logic suggests that repressive regimes like China have more to fear from leaked information that Western nations, and this argument is supported by the impact Wikileaks revelations have had in the Arab world.

He does not claim credit for the Arab Spring, mind you. But he scoffs at suggestions that Wikileaks played little or no part.

"After Mubarak fell, we witnessed an extraordinary change in rhetoric from Hillary Clinton and the White House, from “Mubarak is a great guy and he should stay,” to “Isn’t it great what the Egyptian people have done? And isn’t it great how the United States did it for them?” Likewise, there is an idea that these great American companies, Facebook and Twitter, gave the Egyptian people this revolution and liberated Egypt.

"But the most popular guide for the revolutionaries was a document that spread throughout the soccer clubs in Egypt, which themselves were the most significant revolutionary community groups. If you read this document, you see that on the first page it says to be careful not to use Twitter and Facebook as they are being monitored. On the last page: do not use Twitter or Facebook. That is the most popular guide for the Egyptian revolution. And then we see Hillary Clinton trying to say that this was a revolution by Twitter and Facebook."

Another important part of the Wikileaks economic model is Assange's extensive partnerships with media organisations. He originally thought that individual bloggers would be best positioned to spread new leaks, but was frustrated by his chosen group's failure to embrace the initiative.

Perhaps Assange failed to recognise that bloggers have their own economic realities - while their are millions of bloggers on the internet, only a tiny handful are able to make even a modest living from it. Leaked data needs to be recognized as valuable, analyzed in context, and disseminated widely. Not many bloggers have the time, the skills, or the online profile to do that properly.

Thus was born the peculiarly symbiotic and frequently rocky relationship between Wikileaks and various newspapers around the world. "Courage is contagious!" asserts the Wikileaks motto. Assange wants to maximize the impact of the leaks by encouraging these sometimes rigid or politically compromised news organizations to be braver. It doesn't always work.

"For example," says Assange, "One of the stories we found in the Afghan War Diary was from 'Task Force 373', a US Special Forces assassination squad. Task Force 373 is working its way down an assassination list of some 2,000 people for Afghanistan, and the Kabul government is rather unhappy about these extrajudicial assassinations.

"There is no impartial procedure for putting a name on the list or for taking a name off the list. You’re not notified if you’re on the list, which is called the Joint Priority Effects List, or JPEL. It’s supposedly a kill or capture list. But you can see from the material that we released that about 50 percent of cases were just kill — there’s no option to “capture” when a drone drops a bomb on someone. And in some cases Task Force 373 killed innocents, including one case where they attacked a school and killed seven children and no bona fide targets, and attempted to cover the whole thing up.

"This discovery became the cover story for Der Spiegel. It became an article in The Guardian. A story was written for The New York Times by national security correspondent Eric Schmitt, and that story was killed. It did not appear in The New York Times."

Such cover-ups clearly rankle with Assange's natural sense of justice. He's also deeply concerned with how uncomfortable facts can be made to disappear after the fact, particularly in a digitalized age where important information can be deleted with a single key stroke.

"We are building an intellectual scaffold for civilization out of plasticine," he complains.

"With digital archives, with these digital repositories of our intellectual record, control over the present allows one to perform an absolutely untraceable removal of the past. More than ever before, the past can be made to completely, utterly, and irrevocably disappear in an undetectable way.

"I want to make sure that WikiLeaks is incorruptible in that manner. We have never un-published something that we have published."

Assange claims a new global naming convention, based on "a mathematical function on the actual intellectual content", is the way forward.

"We need a way of consistently and accurately naming every piece of human knowledge, in such a way that their name arises out of the knowledge itself, out of its textual, visual, or aural representation, where the name is inextricably coupled to what it actually is. If we have that name, and if we use that name to refer to some information, and someone tries to change the contents, then it is either impossible or completely detectable by anyone using the name."

Assange believes the capability for such a naming convention has already been realized.

"It will be a new standard that, I hope, will apply to every intellectual work, a consistent way of naming every piece of intellectual creation, anything that can be digitized. And so, if we have a blog post, it will have a unique name. And if the post changes, the name will change, but the post and the name are always completely coupled. If we have a sonata and a recording of it, then it has a unique name. If we have a film in digitized form, then it has a unique name. If we have a leaked, classified document that we release, it has a unique name. And it’s not possible to change the underlying document without changing the name. I think it’s very important — a kind of indexing system for the Tower of Babel, or pure knowledge."

*

Historically, those in power have always controlled the military. Their power usually depended on that control. In more repressive societies, the gatekeepers also controlled the clergy and judiciary. Even so, the truth could find a way out. Many a rumour, whispered on the cobbled streets of medieval Europe, was punishable by death.

Then the Industrial Revolution arrived, and technology changed the game. The advent of the printing press brought even more widespread insurrection, followed by even greater repression. Rulers soon learned to see the media as a critical final frontier of control.

Russia's Pravda and the Chinese media became the poster children of government propaganda, but even the CIA boasted that they had an agent in every major US media outlet. And that was back in the 1970s.

In situations where a government controls the military, the judiciary, the clergy and the media, people have historically been left with no recourse to justice, no avenue through which their voices can be publicly heard.

Until now.

Now the Internet, and the telecommunications mechanisms on which it is built, provide an alternative flow of data. Information can move from person to person, on a massive scale, around the world, at virtually the speed of light. We might well call the Internet "the Fifth Estate".

But such a technological breakthrough is meaningless if either (a) important information remains suppressed, or (b) Internet technology itself becomes captive to those in power.

Wikileaks has shown that both forms of repression are impossible to sustain. The revolution is here to stay.

UPDATE:

Thanks so much to my Twitter friends for promoting this blog post. Within a few hours of posting the blog I was being re-tweeted by @wikileaks! Humbling stuff. Anyone interested can follow me - @Jaraparilla.

For anyone interested in the second part of that excellent Hans Ulrich Obrist interview with Julian Assange, it should be posted on http://www.e-flux.com/ very soon. The second part is a Q&A with various artists, etc.

Meanwhile, I recommend this @abcthedrum article by Mark Pesce (@mpesce) on Silk Road, Bitcoin and government failure to even understand that this technological revolution cannot be stopped: http://www.abc.net.au/unleashed/2754260.html

Saturday, June 11, 2011

Hate, like evil, is a strong word. It should not be used lightly. But I hate you, Rupert Murdoch. And I hate the stupid hacks who do your evil bidding, because they force me to sit up at night writing reality-checks like this when I could be doing far more enjoyable things.

I also hate Frank Lowy. He's a man who is feted as an Australian hero because he has a lot of money, his family survived the horrors of Auschwitz, and he supposedly likes football. But he treats his Westfield tenants like rubbish, he aids the Israeli persecution of Palestinians, and he doesn't pay his taxes. In fact he goes out of his way to avoid paying taxes. And the Murdoch media helps ensure that nobody in Australia worries too much about that.

But of course, sometimes there's a story. A story that cannot be ignored. So what are you going to do? Let your enemies break the news first and frame the story to suit their interests? Or get the jump, frame the story to suit your own interests, and sell a few newspapers?

OK. The answer is obvious. So how does the Murdoch press frame the story that keeps me awake tonight? The first paragraph reminds us what a great bloke Frank Lowy is. The second para explains that our hero "is in the midst of a mammoth battle to protect his rights against tax authorities". Well, we can all relate to that,right? But if YOU refused to pay your taxes in full, would the Murdoch press frame YOUR story that way? Again, the answer is obvious.

The third para gives us the "back story". Thanks to a whistle-blower named Heinrich Kieber, the Australian Tax Office (ATO) has evidence that Lowy has been using Liechtenstein banks to avoid paying his taxes. But of course they don't call Kieber a "brave whistle-blower". He is framed as a criminal who "stole the details of 1400 LGT Bank clients" then "SOLD OR GAVE THEM to tax authorities around the world."

Well, wait a minute. Did he sell the data, or give it away? Surely that's a big clue to his motives? The answer appears to be a mixture of both. Kieber knew his life was in danger as soon as he leaked the data, and he may have solicited money as part of deals with those who most wanted the information, including the US government and the ATO.

(Never mind that Kieber has since handed over all the data to Julian Assange's Wikileaks. Or that Kieber apparently now lives in Australia, where some kind of witness protection scheme was presumably part of the deal. But more of that anon...)

Paragraph four tells us that Kieber was due to give evidence in a Brisbane court last week. But - horrors! - it seems he could now "give evidence in closed court - protecting the man who gave away the secrets of so many." So Australian courts are protecting this dangerous villian, eh?!

Even worse, as para five highlights in a single sentence: "The move would also avoid public scrutiny of the tax office's dealings with him." Now there's your frame! Got it? Murdoch and Lowy want to know exactly what the ATO is up to!

So what do we have so far, people?

A crazy psycho who stole personal data from a reputable bank and sold it for personal profit to the ATO, who are now scheming to bring down a great Australian hero? Or a brave man who leaked details of widespread global criminal activity and is now struggling to bring it to light without being assassinated?

I will let you decide for yourself. Go read the article, for starters. But don't assume the Murdoch media is giving you the full story. The internet is your friend, if you just give it enough attention.

Frank Lowy's lawyer, Abbe Lovell, is a former counsel to American Israel Public Affairs Committee (AIPAC) and disgraced US lobbyist Jack Abramoff. He knows exactly how he wants this story framed, and the Murdoch media is clearly there to help him.

According to para twenty, Lowy sent a two-page letter to the ATO on July 3, 2008, with 1100 pages of attachments. Abbe Lovell wants to know if the ATO forwarded Lowy's entire dossier to the Internal Revenue Service. A US judge recently ordered the IRS to provide more information on this.

Meanwhile, just quietly, the Murdoch media wants everybody involved to know that they have "obtained the transcript of interviews between Mr Kieber and three high-ranking members of the tax office, as well as a letter sent by Mr Kieber in 2006." Not that they are taking sides or anything. Just letting you know. Before the court case on Tuesday. And that.

Oh! And importantly: "neither Frank Lowy, nor any of his family members, are named in the documents." Well, of course not! Perish the thought!

Kieber's own chilling words are buried in the penultimate paragraphs:

"Looking at your country's files, the key data of my material include: around 60 names of individuals (Australian citizen or NON-Australian citizen living in Australia) as Beneficial Owners of over $110 millions AU$ on offshore bank accounts with indication of much more Millions in other Banks/Offshore countries."

"My original e-documents ... provide more than enough details to identify each individuals and his/her chosen legal entity (i.e. Foundation, Trust, Ltd, Company or Establishment)."

PS: (final para) - there's no proof the ATO paid Kieber anything more than an airfare and accomodation. Oops.

A sweeping tax-evasion probe roiling Germany and threatening to spread toother countries was sparked by bank client data allegedly stolen by a formerLiechtenstein bank employee now believed to be in Australia, according toauthorities in the small alpine principality.

Heinrich Kieber, a former employee of Liechtenstein's largest bank, LGTGroup, has offered confidential client data to tax authorities on severalcontinents over the past 18 months, including the U.S., according to aperson familiar with the matter. Such disclosures could undermineLiechtenstein's reputation as a reliable and discreet tax haven for richforeigners.

The data already has caused a firestorm in Germany, where authorities saythey are pursuing leads on hundreds of possible tax dodgers. The Germangovernment paid roughly €4.2 million to an unnamed individual forconfidential information tied to Liechtenstein accounts. The government hasdeclined to identify the source of its information.

In an opening salvo of the probe, German prosecutors last week detainedKlaus Zumwinkel, the longtime head of postal giant Deutsche Post AG and apillar of the country's corporate establishment. Deutsche Post saidyesterday that Frank Appel, a board member, will replace Mr. Zumwinkel, whohasn't commented publicly on the tax-evasion charges.

Police raided homes and offices in several cities yesterday, includingMunich in the south and Hamburg in the north, as they extend their dragnet."The raids will continue for weeks," said Eduard Güroff, a spokesman forprosecutors in the western city of Bochum, which is leading theinvestigation.

Liechtenstein authorities said they suspected prosecutors in Germany areacting on information first taken from the bank by Mr. Kieber, aLiechtenstein citizen and former LGT employee.

Robert Wallner, a prosecutor in Liechtenstein, said Mr. Kieber was chargedwith fraud earlier this decade in an unrelated real-estate case. During theinvestigation, he added, Mr. Kieber threatened to release sensitive bankdata on thousands of LGT clients unless he was given a new passport andidentity to avoid prosecution.

Prosecutors denied the request and believed at the time that Mr. Kieberreturned all confidential data to Liechtenstein authorities, according toMr. Wallner. After upholding his conviction in 2004 but allowing him to gofree, Liechtenstein authorities lost contact with Mr. Kieber, he added.

Liechtenstein authorities now suspect that Mr. Kieber, who they say is about50 years old, kept some data and shared it with other individuals. They areinvestigating the matter. Mr. Kieber is believed to be in Australia,according to people familiar with his case. He couldn't be located forcomment.

LGT, which is owned by Liechtenstein's ruling family, wouldn't comment onthe possible role of Mr. Kieber. It said that confidential client data wasstolen from LGT Treuhand AG, a subsidiary, in 2002 by an employee who is nolonger with the company. The bank added that it appeared the data "has beenunlawfully disclosed" and that it became aware of the problem last summer.

A spokesman at LGT said the bank is cooperating with Liechtensteinauthorities. He added that there had been no direct contact with Germanauthorities.

Thursday's raid of Mr. Zumwinkel's villa on the outskirts of Colognerepresents further upheaval for corporate Germany, which already is reelingfrom recent corruption scandals involving some of its marquee corporatenames and increasingly heated public debates about richexecutive-compensation packages at a time when prices are up and the economyis slowing.

Analysts say the negative publicity has fueled support for left-leaningpolitical parties in recent state elections, further stalling economicrestructuring measures pushed by Chancellor Angela Merkel's conservative-ledcoalition government.

"People could lose their trust in the market economy. This is the bigdanger," said Joachim Schwalbach, a professor at Humboldt University'sInstitute of Management in Berlin.

Liechtenstein has long been a destination for the undeclared funds ofwealthy Europeans. Often, money is driven across the border and delivered incash to local banks.

Germany, where income-tax levels can exceed 40%, has been trying to clampdown on tax evaders for decades but often with limited success because ofthe lack of a coordinated international approach.

By agreeing to pay for information tied to Liechtenstein bank accounts,German investigators are now taking recent efforts to clamp down on taxdodgers to a new level, tax lawyers said.

"It's a clear message to the German public that even accounts or trusts inLiechtenstein are not safe anymore," said Andreas Köster-Böckenförde, alawyer in Frankfurt at the law firm Jones Day.

Liechtenstein, alongside Andorra and Monaco, remain on a shrinking list ofso-called uncooperative tax havens drawn up in 2002 by the Paris-basedOrganization for Economic Cooperation and Development. Liechtenstein stillmakes a distinction between money laundering and international tax evasionwhen it offers to help with international investigations, said Jeffrey Owen,an OECD official.

The Liechtenstein government spokeswoman declined yesterday to respond toquestions, referring queries to a news conference today.

--Edward Taylor and Almut Schoenfeld contributed to this article.

URL for this article:http://online.wsj.com/article/SB120333229682874855.html

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